Am I missing something here? Mr. Ross states that a 1% increase in mortgage rates from 2.8% to 3.8% results in a 40% payment increase. Based upon a $100,000 mortgage, a 2.8% rate results in a payment of $463.04 on a 25 year amortization. A 3.8% rate results in a payment of $515.23, an 11.3% increase. The same percentage increase would result with any mortgage amount. What numbers is he using for the 40% increase?

It's actually even less then 11.3% as you have a 5-year fixed mortgage at 2.8%, at the end of which the rate would go up to, say 3.8%. But now you have a term left over of 20 years, and with the principal remaining of around $85k as per above numbers the payments will be recalculated to $505/mo or around 9% higher payments then original. Nowehere near the 40% the author writes.